Author: Fred Clements

As independent businesses fight for their place against chain stores and Internet giants, there may be some significant push-back against the big guys. A new survey shows many independents are doing well and even better than their bigger competitors in several areas, including 2015 sales growth.

The Independent Business Survey, conducted annually by the Institute for Local Self-Reliance and Advocates for Independent Business, gathered data from over 3,200 independent businesses reporting solid sales in 2015, with revenue growing an average of 6.6 percent. Among independent retailers, revenue increased 4.7 percent in 2015, including a 3.1 percent gain during the holiday season.

These figures are significantly better than that of many national retail chains. Overall holiday retail sales rose just 1.6 percent in December according to the U.S. Department of Commerce.

Successful selling is a transfer of enthusiasm, not a transfer of product knowledge.

So says Sam Dantzler, keynote speaker at last week’s IBD Summit in Tempe, Arizona. He is a sales trainer for the powersports and marine industries, and also plans to enter the bicycle industry this year with a web-based staff training program.

Dantzler’s bluntly-titled presentation “Discounts Suck. Loyalty Rocks” described the importance of relationships in the sales process to reduce discounting pressures, “moving away from product descriptions and into human connection.”

He used the example of Harley-Davidson, a motorcycle that is not the most reliable, not the cheapest, and not the best performer. But it has a following that far surpasses other motorcycle brands.

“Harley built emotion into their brand,” Dantzler said. “In a need-based industry, purchasing is more based on logic. But in want-based industries like motorcycles or bicycles, it’s an emotional buy. So don’t try to attack this logically. Be emotional.”

He compared a “dive bar” experience to a high-end martini bar. The specs of the product may be very similar, but the setting and the presentation at the martini bar allow it to command much higher prices, and for the consumer to have a much better experience.
Apple vs. Samsung is another example. Apple has done an excellent job appealing to peoples’ emotions to command a premium price. Samsung phones, often with superior specs, appeal more to logic.

Sales tax reform may have new life, as a new bill has been introduced in the House of Representatives that would level the playing field between brick-and-mortar stores and on-line sellers related to sales tax collection.

Utah Representative Jason Chaffetz (R-UT) introduced the Remote Transaction Parity Act of 2015, HR 2775, in mid-June. He is seeking Congressional co-sponsors as well as overall support. His move is considered to be significant because he is a conservative Republican who realizes that this is not a new tax, but instead a fairness issue related to small business. As of last week, he had 22 Republican and 18 Democrat co-sponsors. The goal is at least 10 more co-sponsors so the House leadership will move on the bill.

Bicycle dealers are urged to contact their members of Congress asking them to both sign on as co-sponsors and support the legislation to finally put an end to a seriously flawed sales tax system that requires retailers with physical stores to collect sales taxes (in states where it is required) while many on-line sellers do not.

The number of bike shops continues to drop each year, with another 4% decline projected in 2015, but a new survey shows that several other dealer metrics are actually trending up.

According to the NBDA’s 2015 Specialty Bicycle Retail Survey, the average bike store is now larger in both dollar volume (over $1 million per year, an all-time high), and physical size (6,461 square feet), than ever before. They are also improving in sales efficiency, with average sales of $185 per square foot, a record high for these surveys, and an increase of 3% from the previous year.

While there continue to be huge challenges, the IBD channel itself was apparently churning along fairly well in 2014. IBDs were responsible for $4.7 billion in retail sales last year, including used bikes, approximately 63% of the retail dollars spent on cycling in the United States. This reinforces the notion that while many are certainly fighting for their business lives, a lot of them are fighting successfully. Over half reported that their sales were up in 2014.

A new report from a company called Timetrade pushes back against some of the hype and e-commerce love. The report notes that physical stores dominate retailing so thoroughly that calling it a mismatch is understating the case to the point of absurdity. And while e-commerce is expected to more than double by 2020 to about $550 billion, the money spent at stores will still be nine times what is spent on-line that year.

The Timetrade report is based on in-depth survey of 1,029 consumers about their shopping patterns and motivations. While the limited sample hardly qualifies it as hard research, the report does make a number of interesting points related to on-line versus bricks-and-mortar.

Some highlights:

87% of consumers say they plan to shop in physical stores in 2015 at least as often as in 2014.

85% say they go into stores to “touch and feel things.”

71% say they would prefer to shop in Amazon’s physical store versus Amazon.com.

65% report that if an item they want is available online or in a nearby store, they prefer to shop in the store.

Mobile shopping is cited as a trend, but when consumers are looking to buy something, just 13% use a mobile device to do so. Most use mobile to browse, research products, compare prices, and then look for the nearest store location.

Nearly 90% of respondents are more likely to buy when helped by a knowledgeable staff member, and 50% value the expertise of sales associates.

63% say that if an item is the same price at four different retailers, they decide where to shop based on the overall customer experience they have.

If a knowledgeable sales associate recommends items the customer may need based on what they know about the customer, 64% said they would leave the store much more satisfied.

Members of Congress like to say nice things about small businesses in this country, but the track record shows it routinely favors big corporations instead, according to a May 7 opinion piece published in the Wall Street Journal.

The article was written by Stacy Mitchell of the Institute of Local Self Reliance, with the NBDA’s Fred Clements listed as co-author. Both are involved in Advocates for Independent Business, an umbrella group of 15 associations representing independent businesses, including bike shops, book stores, toy stores, running stores, florists, hardware stores and others.

“Members of Congress love to evoke the diner and dry cleaner, the neighborhood grocer and local hardware store,” the article says. “Ensuring the well-being of Main Street, we might easily assume, is one of their central policy aims. The legislative track record tells another story.”

The article notes that since the late 1990s, the overall market share of firms with fewer than 100 employees has fallen from 33% to 28%, according to U.S. Census data. There are nearly 80,000 fewer small retailers today than in 1999.

Referring to the work of Charles Darwin, Shapiro noted that human evolution is not driven by survival of the fittest. Instead, it’s all about adaptability, the ability to change. This has a direct parallel to business survival today.

He noted that Sears was once ten times the size of Wal Mart, but is now a shell of its former self. Pan Am was once the number one airline in the west, but failed. Howard Johnson’s restaurants were once everywhere, but not anymore. Closer to home, Schwinn went from prominence to relative obscurity.

All were once robust companies at the top of their games. They failed to adapt in various ways and for various reasons, relying on solutions that had worked in the past and being sure of their own expertise. “Expertise,” Shapiro noted, “is the enemy of innovation.” Or, in the words of Continue reading “Innovate, Adapt and Prepare to Fail Forward”→